It’s no secret that the UK population is ageing. The Office for National Statistics (ONS) projects that more than 24% of people living in the UK will be aged 65 or older by 2042, up from 18% in 2016.
Together with an ageing population, changes in legislation and increasing care costs, it’s more important than ever to consider planning for long-term care to protect yourself and your family.
Will the government support me?
The way care is funded works differently across the UK.
In England and Northern Ireland the situation depends on how much capital you have:
Less than £14,250: you will be entitled to support from the local authority. You won’t have to contribute from your capital, but you will be expected to contribute from your income. Third party top ups will be required to pay care costs which are above the local tariff rate.
More than £14,250, but less than £23,250: you are required to contribute towards the cost of your care at a rate of £1 for every £250 of savings between £14,250 and £23,250. This is known as ‘tariff income’.
More than £23,250: you will have to pay the full cost of your care.
In Scotland, the capital limits are as follows:
Less than £17,500: you will be entitled to maximum support from the local authority. You won’t have to contribute from your capital, but you will be expected to contribute from your income.
More than £17,500, but less than £28,000: you are required to contribute towards the cost of your care at a rate of £1 for every £250 of savings between £17,500 and £28,000.
More than £28,000: you will have to pay the full cost of your care. If you have less than £28,000 in capital, but a weekly income considered to be high enough to cover the cost of your care, you will have to pay all of your fees.
If you live in Wales, local authorities must apply a capital limit to people’s savings and other assets – this is currently £24,000.
Most assets and savings are included in the means test, but your home will be excluded if:
Your spouse lives in the property
A disabled relative lives in the property
A relative over 60 lives in the property
A child under 16 lives in the property
The person is in the first 12 weeks of needing permanent care
Care is temporary
Can I give my property away?
There is no time limit for the Local Authority to question any transfer of property to establish whether the motive for transferring may have been to exclude the property from the means test.
What are the costs of long-term care?
Costs are very different depending on whether you receive care in your own home or in a care home and also depend on how much support you need.
According to a report by healthcare specialists LaingBuisson in 20182, care home costs can range from:
£27,000 to £39,000 per year for a residential care home,
£35,000 to £55,000 per year if nursing is required
These costs may not include things like day trips, hairdressing etc, so it’s important to check exactly what is included.
Is a cap on care costs being introduced?
Following the Care Act 2014, a proposed £72,000 cap on care costs was due to be introduced from April 2016. However, this was then postponed to April 2020 and is now pending the publishing of a Government Green Paper.
How can I plan for long-term care costs?
We can advise you on how best to plan for your potential long-term care needs by creating a plan specific to your individual circumstances.
This could be through investments, purchase of an annuity (lifetime income), property-related finance (such as equity release) or a combination of these.
If you’re facing the challenge of paying for care, either for yourself or a loved one, we can help you make the right choices, so do get in touch.
The value of investments may fall as well as rise. You may get back less than you originally invested.
Think carefully before securing other debts against your home. Equity released from your home will be secured against it. To understand the features and risks, ask for a personalised illustration.